The Morning Ledger: ‘Spotify Rule’ Would Help NYSE to Woo Unicorns

The New York Stock Exchange is seeking to change its listing standards as it vies for Spotify AB and other hot startups that are considering an unusual tactic called a direct listing, Alexander Osipovich and Maureen Farrell write.

Direct listings allow companies to have their shares trade publicly, without raising money as in a traditional initial public offering, and there aren’t restrictions on when insiders can sell shares. The NYSE in March filed with the U.S. Securities and Exchange Commission to tweak its rule book on the process, a move the agency will rule on in coming weeks.

Approval by the SEC would remove an obstacle that prevents companies such as Spotify from using direct listings to list on the Big Board, lawyers say. Making it easier for closely held firms to use this approach could help the NYSE attract “unicorns,” or startups valued at $1 billion or more.

The NYSE, a unit of Intercontinental Exchange Inc., competes fiercely with Nasdaq Inc. for listings. So far, Nasdaq has completed about a half-dozen direct listings of private companies since 2006, while the NYSE has had none, according to representatives for the two exchange groups.

U.S., eurozone unemployment, inflation.On Wednesday, China’s official May manufacturing purchasing managers index (release time is Tuesday night in the U.S.) is expected to edge down to around 51.0, from 51.2 in April.

India’s first-quarter gross domestic product figures will indicate whether the world’s fastest-growing large economy has sprung back from November’s move to void large currency notes. A week ahead of its next policy meeting, the European Central Bank is expected to receive mixed news from the European Union’s statistics agency, with both unemployment and inflation falling.

U.S. Federal Reserve governor Jerome Powell will on Thursday deliver thoughts on the normalization of monetary policy at a breakfast meeting in New York. Economists will be watching wage growth figures when the U.S. Labor Department release the May jobs report on Friday.

CORPORATE NEWS

Cans of Dulux paint, an Akzo Nobel brand, are seen on the shelves of a hardware store near Manchester, Britain, April 24, 2017.

Court documents shed light on Theranos’s response to crisis. Two former Theranos Inc. directors said they didn’t follow up on public allegations that the Silicon Valley blood-testing firm was relying on standard technology rather than its much-hyped proprietary device for most tests, according to newly released court documents.

Goldman under fire for Venezuelan bond deal. Goldman Sachs Group Inc. is on the defensive in Venezuela after it bought bonds that had been held by the struggling country’s central bank in a transaction the government’s opposition decried as a lifeline to President Nicolás Maduro’s embattled administration.

IAG shares down after IT glitch. Shares in British Airways parent company International Consolidated Airlines Group SA fell more than 4% in early trading on Tuesday, after the airline endured a long weekend of chaos following an IT glitch.

Qualcomm sets up chip joint-venture in China. Qualcomm Inc. said it has formed a joint venture to make low-end smartphone chips in China, as part of Beijing’s efforts to build up a local semiconductor sector capable, Caixin reports.

BMW slows production. BMW AG is slowing production of certain models because of a shortage of parts caused by delivery problems from supplier Bosch GmbH.

Nintendo faces component shortage. Nintendo Co.’s biggest battle these days isn’t against other game makers. It is against companies like Apple Inc. that are gobbling up the same parts Nintendo needs to make its hit Switch machine, people in the industry say.

JBS chairman resigns.Joesley Batista, the chairman of the world’s largest meat producer, JBS SA, stepped down Friday. His resignation comes weeks after he admitted his company bribed Brazilian politicians in exchange for subsidized loans and other favors.

China Huishan hit by corporate governance meltdown.All of China Huishan Dairy Holdings Co.’s board members except its chairman have left since the company’s shares plunged 85% in a single trading session in March. The departures come as the company faces allegations of financial irregularities.

BT mulls pension changes.British telecommunications provider BT Group PLC is considering closing its defined-benefit pension plan, following similar moves by other former state-owned companies including Royal Mail PLC, the Guardian reports.

REGULATION

The U.S. Securities and Exchange building in Washington, D.C., U.S., Oct. 5, 2016.

RBS investors settle.A group of Royal Bank of Scotland Group PLC investors accepted a £200 million ($256 million) settlement from the bank to end a legal fight over allegations the lender misled them. The group alleged they weren’t told about RBS’s weak finances before investing more cash into the sinking bank in 2008.

Credit Suisse fined by Singapore’s central bank.Singapore’s financial regulator imposed fines on two large banks including Credit Suisse AG as it concluded a two-year investigation into widespread anti money-laundering failures throughout its financial system related to alleged misappropriations from Malaysian state fund 1MDB.

New regulations fail to deliver audit shake-up. Despite new regulation designed to increase choice and competition, the so-called big four—Ernst & Young LLP, Deloitte LLP, KPMG LLP and PricewaterhouseCoopers LLP—audit 98% of the U.K.’s FTSE 350 companies, the Financial Times reports.

EARNINGS

Ryanair profit edges up. Ryanair Holdings PLC Tuesday posted a 6% rise in net profit for the past financial year after Britain’s decision to exit the European Union and terrorist attacks weighed on earnings, and the airline said growth this year would advance as least as much amid stronger bookings.

ECONOMY

In this March 23, 2017, photo, a workman operates a loom while manufacturing composite parts at Bally Ribbon Mills in Bally, Pa., U.S.

AP

U.S. first-quarter GDP growth revised up.Gross domestic product expanded at a seasonally adjusted annual rate of 1.2% in the first quarter, the U.S. Commerce Department said—an upgrade of its previous, 0.7% forecast for the first quarter.

Republicans face rifts over spending bills. Republicans agree that President Donald Trump’s budget cannot lead to spending bills that keep the government running until current funding expires. But they disagree internally over how to craft those spending bills, which will need support from Democrats to avoid a partial government shutdown on Oct. 1.

Credit scores reach record high.Credit scores for U.S. consumers reached a record high this spring. Improved fortunes point to falling unemployment and tepid but continuous economic growth.

Draghi says eurozone still needs stimulus.Top European Central Bank officials signaled Monday that the bank isn’t ready to wind down its large monetary stimulus, dashing hopes in Northern Europe that the era of ultralow interest rates might be drawing to a close. Meanwhile, a Berlin-based law professor has filed a cease-and-desist request aimed at quickly ending Germany’s involvement in bond purchases by the ECB.

CFO MOVES

Knoll Inc., an East Greenville, Pa., office-design firm, announced the resignation of its finance chief and senior vice president, Craig Spray. Charles Rayfield, the company’s corporate controller and vice president of finance, will assume the role of chief accounting officer and acting principal financial officer.

The Morning Ledger from CFO Journal cues up the most important news in corporate finance every weekday morning. Send us tips, suggestions and complaints: kimberly.johnson@wsj.com.

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Tax reform may present challenges for some organizations that prepare their financial statements using International Financial Reporting Standards (IFRS). They include, determining how an aspect of the legislation applies to an organization’s specific facts and circumstances, gathering data to quantify that application, or a combination of the two. Todd Izzo, partner, International Tax, and Paul Vitola, partner, Washington National Tax Group, both with Deloitte Tax LLP, discuss how the interaction between the new tax law and IFRS may play out with respect to net operating losses, the new global intangible low taxed income inclusion requirement, and other issues.

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